TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Show Cause Notices Under GST Must Be Issued Separately for Each Financial Year as per Section Rules</h1> <h3>Smt R Ashaarajaa, J. Rajendran, R. Deepak Vigneshvar And Others Versus The Senior Intelligence Officer, The Superintendent of Central Tax CGST Central Excise And Others</h3> Smt R Ashaarajaa, J. Rajendran, R. Deepak Vigneshvar And Others Versus The Senior Intelligence Officer, The Superintendent of Central Tax CGST Central ... ISSUES: Whether the issuance of a single show cause notice ('bunching') for more than one financial year under the Goods and Services Tax Act, 2017 ('GST Act') is permissible.Whether the limitation periods prescribed under Sections 73 and 74 of the GST Act apply separately to each financial year or can be aggregated for multiple years in a single notice.Whether the practice of issuing a combined show cause notice for multiple financial years prejudices the rights of the assessee, including the ability to avail compounding of offences or amnesty schemes.The interpretation of 'tax period' under the GST Act and its impact on the issuance of show cause notices.The legal consequences of issuing assessment orders based on combined show cause notices covering multiple financial years. RULINGS / HOLDINGS: The GST Act permits issuance of show cause notices only based on the 'tax period,' which is defined as the period for which the return is required to be furnished, i.e., monthly or yearly returns, and therefore, no show cause notice can be issued for more than one financial year. The Court emphasized a 'clear bar for 'bunching of show cause notice', i.e., issuance of single show cause notice for more than one financial year.'The limitation periods under Sections 73(10) and 74(10) of the GST Act apply independently to each financial year, with three years for non-fraud cases and five years for fraud or willful misstatement cases, making aggregation of years in a single notice impermissible as it conflicts with the statutory scheme.The issuance of a combined show cause notice for multiple financial years causes 'unnecessary hardships' to the assessee, including inability to file applications for compounding offences under Section 138 or avail amnesty schemes selectively for particular years, and prejudices the right to contest or settle issues for individual financial years.The word 'any period' in Sections 73(1) and 74(1) refers to a single 'tax period' as defined under Section 2(106) of the GST Act, and does not extend to multiple financial years; thus, a single notice cannot cover multiple years.Assessment orders based on combined show cause notices for multiple financial years are issued without jurisdiction and are therefore liable to be quashed. RATIONALE: The Court relied primarily on the statutory framework of the GST Act, particularly Sections 73 and 74, which prescribe the procedure and limitation periods for issuance of show cause notices and passing of assessment orders, emphasizing the separate treatment of each financial year as a distinct tax period.The interpretation of 'tax period' under Section 2(106) of the GST Act as the period for which a return is required to be furnished (monthly or yearly) was pivotal in concluding that notices cannot be issued beyond the relevant financial year.The Court referred to precedent including a Constitution Bench decision holding that 'where an assessment encompasses different assessment years, each assessment year could be easily split up and dissected and the items can be separated and taxed for different periods,' reinforcing the principle of separate limitation periods and assessments per year.Earlier judicial pronouncements, including a prior ruling of this Court in the 'Titan case' and a Division Bench decision from Kerala High Court, were cited to support the impermissibility of bunching and to highlight the prejudicial effects on the assessee's rights and statutory safeguards.The Court rejected the respondents' argument that 'any period' could mean multiple financial years, clarifying that the statutory scheme contemplates issuance of notices based on individual tax periods and that acceptance of bunching for monthly periods does not justify bunching for multiple financial years.The Court noted practical hardships caused by bunching, such as loss of opportunity to avail compounding or amnesty schemes selectively, and the risk of colorable exercise of power by bypassing shorter limitation periods applicable under Section 73 by clubbing with Section 74 proceedings.
TaxTMI 
TaxTMI 
